Finance secretary says NM still caught in recession

SANTA FE — The economy has improved in much of the country, but not in New Mexico, a state executive told legislators Tuesday.

"We really have not come off the bottom of this recession," said Tom Clifford, cabinet secretary of the Department of Finance and Administration.

He was among a half-dozen state officials who briefed the Legislature's interim committee on revenue and tax policy.

Clifford even sounded a cautionary tone when discussing the oil industry, a beacon of success during dark times for much of the state.

He said oil exploration typically is cyclical, marked by ups and downs. An abiding concern is that the oil boom, which has created a strong economy in southeastern New Mexico and bolstered state tax revenues, could end, he said.

Clifford said state government itself had recovered to a large extent since the worst of the five-year recession.

This year's state budget of $5.88 billion is almost as large as the one of five years ago. Even more encouraging, general fund reserves have been rebuilt to more than 10 percent, he said.

He said diversifying the state's job base was one goal of Gov. Susana Martinez's administration.

Clifford told legislators that manufacturing, not a strong element in New Mexico, was a sector to build on. A renaissance in U.S. manufacturing is occurring, and New Mexico has a chance to join in it, he said.

Demesia Padilla, secretary of taxation and revenue, said in a separate presentation to the committee that she was optimistic because of a new law cutting the corporate tax rate to make New Mexico more competitive with the rest of the region.

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The state will lower the rate from 7.6 percent to 5.9 percent across five years, starting in 2014. New Mexico's existing rate was the highest among neighboring states and above the national average of 6.4 percent.

Martinez pushed hard for the tax reform during the last hours of this year's legislative session, saying it would lead to job growth.

Clifford said some of New Mexico's economic problems were historical, not of recent making and not attributable to the national recession.

"We really have continued to lag behind the national economy, and that has not changed for 25 years," he said.

State Sen. John Arthur Smith, D-Deming, said the state's struggling economy was rooted in an underachieving school system.

He said his home county of Luna has an unemployment rate of more than 20 percent, yet he sees companies advertising for workers. Smith said the workforce coming out of public schools and colleges simply was not skilled enough to fill certain jobs.

"I don't think we have high expectations in our schools. We do in some, not all," Smith said afterward.

Like his one-time political opponent, Republican Congressman Steve Pearce of Hobbs, Smith also questioned the work ethic of some residents in southern New Mexico.

"Anybody who really wants to work can find a job," Smith said in an interview after the hearing.

He told the committee that New Mexico had a deficiency that hurts it nationally: "We're perceived as a welfare state and an entitlement state."

Milan Simonich, Santa Fe bureau chief of Texas-New Mexico Newspapers, can be reached at 505-820-6898. His blog is at nmcapitolreport.com.